Scotgold shares soar after Cononish site expands

Chris Sangster, pictured at the Trossachs mine, was succeeded at Scotgold by Richard Gray. Picture: TSPL

THE company behind plans for Scotland’s first commercial gold mine is mulling its financial ­options after revealing that its flagship site could have three times more of the precious ore than previously thought.

Shares in Scotgold Resources nearly doubled to 1.32p after an independent mineral resource estimate (MRE) found measured and indicated resources of 248,000 ounces of gold at the firm’s Cononish site. That is an increase of 201 per cent on previous estimates from 2012.

The new study included 3D geological modelling that Scotgold is now using to assess the “optimal mining methodology” for the site, which sits within Loch Lomond and the Trossachs ­National Park. The company expects to have put together a revised mine development plan by the end of June.

Chief executive Richard Gray said the MRE was of “great value” as plans for the funding and development of Cononish take shape. Gray, the former head of mining and expansion at West African operator Avocet, succeeded Chris Sangster as chief executive in October as part of a boardroom overhaul.

“This MRE is truly a cornerstone for the Cononish project and Scotgold Resources,” he said. “In addition to the significant increase in resource ounces, this work done on 3D modelling will underpin a more robust optimisation of our mining plan.”

Scotgold has applied for a three-year extension to planning that allows it to process ore 24 hours a day, six days a week. The amendment – recommended for approval when considered next week – would cut the cost of the Cononish project.

The company bolstered its finances in December when it redeemed a loan from South ­African lender RMB at a cost of £1.2 million. This has widened the options for Scotgold as it looks to raise further financing.

In addition, the firm is continuing early-stage regional exploration work as part of its Grampian Gold Project. However, the decision on a proposed airborne survey has been deferred until the second quarter of this year, when the options for financing in the medium and long-term have been progressed.

October’s boardroom shake-up included a new chairman in the form of Sandy Littlejohn, managing director of Glasgow-based dental laboratory DTS. He replaced John Bentley, who resigned to focus on “other corporate responsibilities”.

However, Littlejohn resigned last month after he was forced to withdraw from underwriting his portion of a rights issue aimed at raising $3.4m. Phillip Jackson is interim chairman.